By J. Stephen McNally, CPA
What is the role of a plant controller? The answer may seem straightforward enough: the plant controller is responsible for personally coordinating the completion of all plant accounting and financial reporting activities related to his or her location. More specifically, the plant controller is responsible for cost accounting, financial closing and reporting, internal control and Sarbanes-Oxley compliance, tax, fixed asset accounting, inventory management, and related activities. But does the plant controller's role stop there? No.
The plant controller is essentially the chief financial officer of his or her location, and as such, must embrace a variety of roles. Indeed, the plant controller may be a talent scout, coach and judge, strategic business partner, treasure hunter, great communicator, corporate citizen, and master of ceremonies. In short, the plant controller must be a well-rounded leader who can wear many hats with style.
Plant Accounting & Financial Reporting
The plant controller's primary responsibility, without question, relates to the performance of traditional plant accounting and financial reporting activities. But this one job has many aspects. To begin, there is cost accounting, which typically includes the analysis and reporting of daily production, purchase price variances, raw material yields, filling yields, production put-away losses, expense budget variances, and related information. As cost accountant, the plant controller also will likely develop cost estimates for new product initiatives based on the results of special batch runs or on reasonable assumptions, ultimately leading to a decision for the given initiative. As cost accountant, the plant controller also manages cost-related reserves, performs reconciliations, and participates in special projects as appropriate.
Next on the plant controller's list of responsibilities is the financial closing process, typically performed monthly. To ensure each step of the process is completed timely and accurately, the plant controller will likely create and monitor a closing check list. For example, during the close, a plant controller will need to ensure that all production orders are closed, in-hand invoices are processed, subsystem posts are tied out, manual journal entries are posted, and reserve accounts are reconciled. Once the numbers are final, the formal analysis and reporting of the plant's financial performance can begin. This analysis will likely include an assessment of risks and opportunities as well as a forecast of performance for the remainder of the year.
Another plant controller responsibility, which became more critical after passage of the Sarbanes-Oxley Act of 2002, is to ensure that internal controls are appropriately designed and operating effectively. To do so, the plant controller must have a solid understanding of the plant's operations and staff, including inherent risks, recent trends, potential changes, segregation of duty concerns, and other insights that could affect the plant's internal control environment. If internal control deficiencies are discovered, the plant controller must appropriately report and execute an action plan to resolve such issues.
In this role, the plant controller may also perform due diligence in support of the plant's quarterly management representation process, complete formal control self-assessment testing, and support internal or external auditors during their reviews.
The plant controller, as resident tax expert, is expected to have an understanding of federal, state, and local tax requirements and related issues. Some issues may include the guidelines regarding real vs. personal property when making capital investment, when capital and other expenditures are subject to sales and use tax, and other tax considerations, such as electric usage excise taxes, appropriate accounting for Social Security as well as federal, state, and local income taxes, and corporate income taxes.
In addition to being the resident tax expert, the plant controller may also be responsible for fixed asset accounting, including capital project reviews, asset capitalization, idle asset reporting, and the physical inventory of fixed assets. Likewise, the plant controller may be accountable for inventory management, ensuring that the plant's inventory controls are adequate, reconciling inventory balances monthly, identifying overage and aging material issues, and coordinating periodic physical inventories. Depending on the nature and complexity of the plant's operations, the plant controller may also handle accounts payable, accounts receivable, cash management, information technology, and other activities. Finally, in addition to reporting the plant's financial performance monthly, the plant controller will likely drive the plant's strategic or annual operating planning process.
Talent Scout, Coach, and Judge
Managing the plant accounting and financial reporting processes is a key aspect of the plant controller's role, but providing leadership and direction to the finance team is equally important. Indeed, the ability to manage and engage the finance team may be a top priority. When wearing this hat, the plant controller moves between the roles of talent scout, coach, and judge.
As talent scout, the plant controller must ensure the finance team consists of sufficient and appropriate talent. To do so, the plant controller must assess the financial needs of the plant, meeting with cross-functional business partners to discuss their expectations of the finance team and to get their feedback regarding what the team does well and what it needs to do better. The plant controller must assess the finance team's current talent, meeting with each member to discuss their self-assessment of personal strengths and weaknesses, career goals and objectives, and developmental needs and desires. With this insight, the plant controller can ensure that the local finance organization is appropriately aligned with the plant's needs and can begin recruiting for any unmet talent needs.
Once the finance team is fully staffed with the appropriate talent, the plant controller becomes both coach and cheerleader. Specifically, the plant controller must ensure that the team is engaged and that each member is delivering against both the plant's needs and their own personal career and developmental objectives. With formalized annual objectives, which are clear, concise, measurable, and aligned with the overall goals and objectives of the plant, the plant controller can monitor each finance associate's progress throughout the year, providing ongoing feedback as appropriate. At times, the plant controller will need to coach staff through challenging assignments, whether from a technical or a behavioral perspective. Other times, the plant controller will need to be a cheerleader, encouraging the team that progress is being made and that their efforts are being noticed and are appreciated. For example, when implementing a new system, and the significant business process changes that go along with it, everyone will experience moments of self-doubt, frustration, and burnout. During these dark moments, the plant controller's leadership, can-do attitude, encouraging words, and willingness to listen can make a profound difference.
In leading the finance team, the plant controller must also assume the role of judge, assessing the team's progress in general and each associate's performance in particular. Any feedback from these judgments should be clear, concise, and formalized in periodic performance appraisals, bringing attention to both an individual's strengths and weaknesses, and setting expectations going forward. By delivering formal judgments in a professional and respectful manner, the plant controller can help an employee understand and accept the need for change. Finally, as resources are limited for most organizations, the plant controller will need to determine how to divvy salary increases across the team. Thus, as judge, the plant controller must determine who will be compensated above, at, and below average.
Strategic Business Partner
The plant controller typically gets involved in nearly every facet of his or her plant's local operations. Indeed, the plant controller not only is the leader of the finance team, but also an overall leader of, and strategic business partner for, the entire plant staff. Most importantly, the plant controller is the plant manager's sounding board and trusted advisor. The plant controller will participate in staff meetings, thereby keeping a finger on the pulse of the operation, updating the staff on the plant's financial performance, and asking the tough questions that come natural to a CPA. As a strategic business partner, the plant controller is a key player when it comes to planning sessions, defining the location's business continuity plans, and developing plant policies with cross-functional implications. If the plant is unionized, the plant controller will provide financial insight to, and may become a key member of, management's collective bargaining committee. Likewise, the plant controller may be tapped as the plant's lead or co-lead for major initiatives such as the implementation of major business process applications. Finally, the plant controller is a key member of the welcoming committee for corporate executives and other plant visitors.
The plant controller's fourth hat is that of treasure hunter, as he or she is always looking for savings initiatives and other opportunities to reduce the plant's total delivered cost. The plant controller works with plant staff to identify cost savings projects, provides the appropriate analysis in support of the due diligence process, and then becomes a vocal champion in support of these initiatives, especially if capital investments are required. For example, if third parties are used for outside storage, there may be a savings opportunity to build an on-site warehouse at the plant; or investing in more efficient and reliable equipment may increase throughput and reduce the cost of maintenance. The plant controller can also provide thought leadership to support the plant's continuous process-improvement initiatives. The plant controller should always keep his or her antenna up for local, state, or federal tax credits and other incentives that become available, and then aggressively go after these incentives, such as training grants, enterprise zone tax reduction opportunities, energy credits, and so on. Finally, the plant controller can play a key role in ensuring that vendor claims are successfully settled by "auditing" the claim package to ensure the evidence is complete and accurate. As a treasure hunter, the plant controller can significantly benefit the plant's financial performance by asking the right questions and focusing on the right areas.
The Great Communicator
Communication is critical for success in any relationship and across any organization. To be successful, therefore, the plant controller must be a great communicator within the finance team, across the plant, throughout the overall organization, and even into the local community. First, ensure all members of the local finance team have the information they need to effectively do their work and are aligned with the plant's priorities. The plant controller can drive this alignment by sharing the company's overall vision, mission, and objectives, and then supporting each member in developing their personal objectives. To facilitate the effective sharing of information within the team, the plant controller can use tools such as financial leadership team huddles, overall plant finance team meetings, as well as one-on-one updates and informal discussions. The plant controller must also ensure that financial concerns and points of interest are shared cross-functionally, and must gain insight into the plant's operational performance and related issues via plant staff colleagues. As a key leader of the plant, the plant controller must ensure the plant's perspective is considered in corporate decisions by building a network of both financial and cross-functional contacts across the company. The plant controller can leverage this network to ensure senior management is aware of plant-related performance, risks and opportunities, and other pertinent issues. Lastly, the plant controller may be called upon to be a corporate spokesperson, who clearly articulates the plant's or company's message accordingly.
The sixth hat of the plant controller is that of corporate citizen. Specifically, the plant controller must strive to build strong relationships between his or her company and the local community and key community leaders, including government officials and business leaders. For example, the plant controller could financially support local charities, actively participate in local events, be a guest speaker, or share financial expertise by joining a charitable board. By doing so, the plant controller can help maintain a positive business environment for his or her company within the local community, resulting in intangible benefits and goodwill.
Master of Ceremonies
Although there are many hats worn by the plant controller, one of the most rewarding is that of master of ceremonies. When working with a highly engaged team, especially when in the midst of significant change, it is easy to overlook individual milestones and achievements along the way. As master of ceremonies, the plant controller should not let these occasions go unnoticed. Sometimes, formal recognition via an award ceremony, public celebration, or financial incentive is appropriate. Other times, the recognition could be as simple as a handwritten note or a verbal thank you. Either way, it is the plant controller's responsibility to show sincere appreciation for a job well done.
The plant controller is required to wear a variety of hats, from the traditional, to the somewhat expected, to the less expected. Indeed, the many hats of the plant controller make the role one of the most interesting available to a CPA.
About the author
J. Stephen McNally, CPA, is finance director and controller for Campbell Soup's Napoleon, Ohio, operations, and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at email@example.com.